In this paper we study the effects of foreign branch activity on commercial banks in the Central, Eastern and Southeastern European countries over the period 1995-2015. We show that more foreign bank branches are present in countries that have higher taxes and regulatory restrictions on bank activity. The increased activity of bank branches negatively effectsl ending of foreign-owned banks and to a lesser extent that of state-owned banks. We attribute it to the fact that branches and foreign-owned banks compete for the same type of clients, namely multinational corporations. Our assumption is conrmed by the fact that the branch effect seems to be larger for corporate loans than consumer loans. Moreover, we nd that the negative effect is stronger for foreign banks owned by multinational banks than by non-banks entities.